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Is your Human Resources function geared up to tackle the challenges of a Continuous Improvement implementation such as Lean Six Sigma or other? Is your company leveraging it’s training, recruiting, compensation, and performance review processes to instill a culture of CI or one of stagnation and status quo? The ultimate function of the Human Resources system in acquiring, developing, and retaining the optimal mix of people needed to deliver the goals of the business. If your business is serious about driving out waste and optimizing the customer experience, shouldn’t your HR function be able to demonstrate how it systematically delivers to these expectations? In many businesses, Lean concepts have begun to infiltrate administrative and non-value stream functions. However, the approach has been to streamline administrative processes to reduce lead time for given tasks. This series of posts looks at re-designing the critical functions of HR such as recruiting, training, performance evaluation, and compensation to embed the incentives that help generate the momentum needed for a CI implementation, especially in American manufacturing. The four areas of focus are as follows:

1) Training Future CI Leaders at All Levels – When the business sets the ambitious goal of implementing Lean, Six Sigma, or other improvement initiative, the company has committed to a full throttle operational transformation. The biggest change happens with the behaviors and attitudes of the people doing the work. It is no long enough to just go to work and do your job. Just hiring one or two CI Leaders is a recipe for failure if everyone else is given the option to buy-in or opt-out. This type of transformation requires all hands on deck. The training function needs to re-tool itself in a way that employs every set of eyes in the organization on eliminating waste.

2) Data vs Non-Data Based Performance Reviews – One of the most dreaded processes in business is the Performance Review process. If you get to the root of why this process is so painful and damn near impossible to do right, its because the feedback is coming from the wrong direction. The people most closely connected with the actual customer are the ones doing the work that the customer is paying for. Yet, often detached managers are providing feedback to those who are closer to the customer. This opens the door for managers to carry out their personal agenda for or against lower level employees and erodes the credibility of the process. It also erodes the capability of the organization. Ideally, the “noise” of the performance review process needs to be removed and made real-time and data-driven so those doing the work can readily see when there is a problem and can simply take corrective/preventative action on the fly. Then systematize the process of escalating production system issues as needed in effort to create a perfect system.

3) Merit-based Compensation – As any Lean practitioner can tell you, the most efficient way to organize a supply chain is to link the elements together so that production can be pulled from downstream (as opposed to pushing from upstream). This concept also applies to compensation where pay can be linked to value created for the customer, which from the factory’s view is income created for the company. In other words, its possible to tie individual employee income directly to company income. In this model, the employee makes money based on the amount of value they contribute. This gives the operator more freedom to create greater wealth for themselves by making a stronger contribution to the company’s bottom line. It also creates a dynamic where those who make wasteful decisions struggle to make a competitive wage.

4) Hiring, Firing, and Promoting for Growth – During a CI implementation, every job description should come with a disclaimer. WARNING: Transformation in Progress – Yield to Change Agents. There are two types of people in manufacturing and in business. One seeks to make themselves comfortable and the other to make things better. In a non-CI culture, comfort seekers rule. When the company decides to undergo a transformation, the scales need to be tipped toward the change agents by hiring and promoting based on people’s track records for successfully driving change. Even better, driving change without leaving a trail of bloody victims in the wake. Comfort seekers in critical leadership roles need to be moved to positions of lesser consequence, then have their talents re-deployed when stabilization (or conformance to standards) is needed as the next phase in improvement.

The HR function plays a critical roll in implementation of any CI initiative. Gaining alignment between HR practices and the goals of the organization are critical for growth and wealth creation in a manufacturing environment. A poorly structured HR system can stagnate growth and add to the stresses inherent in driving change. A well structured system can accelerate growth by embedding the incentives needed to turn the corner. A manufacturing efficiency expert such as those at Manuficient can help you structure your HR systems for transformation and wealth creation.